Business law, which is also known as commercial law, is the term for the body of law which governs entities and commercial transactions. For example, if an individual desired to open a shoe company, business law would dictate how to organize and register the company, how to pay employees, and how to ship merchandise to customers overseas.
Business law applies to numerous aspects of a business. Additionally, business laws vary based on the type of business, such as public vs. private, its structure, such as general partnerships vs. corporations, and by jurisdiction.
What are Common Areas of Business Law?
Business laws are comprised of federal, state, and local regulations. There are various subcategories that pertain to businesses.
Common examples of areas of business laws which may apply to individual and entities include:
- Business formation and dissolution;
- Commercial law and contracts;
- Investing and securities law;
- Intellectual property law;
- Antitrust and white collar;
- Corporate law;
- Bankruptcy;
- Employment law;
- International business; and
- Tax law.
What is International Business?
International business is business which is conducted across national borders. It includes the resources that are needed to produce a company’s goods or services, including:
- People;
- Skills; and
- Capital.
When a company is expanding its business dealings beyond the borders of its country of origin, it needs to be aware of many issues. For example, the business must be aware of not only the laws of its home country but also the laws in countries in which it does business, as well as any international laws which may apply.
What are the Major Types of International Business?
The major types of international businesses include:
- Exports and imports of merchandise;
- Exports and imports of services;
- Licensing, such as to use intellectual property, including patents;
- Franchising. Some examples of major international franchises include McDonald’s and
- Starbucks;
- Partnerships and joint ventures, or the joining of two or more companies;
- Foreign direct investment, where a company bases operations in a foreign country to save money; and
- Turnkey projects, where the company hires an independent contractor to get the business up and running, after which it assumes control.
What are International Business Corporations?
An international business corporation (IBC) is a type of business entity. This is an entity which has been granted a charter by a foreign government to conduct their commercial enterprise.
There are some advantages to utilizing an IBC to move assets offshore, including:
- Asset protection. An IBC may assist with protecting real property as well as savings against future legal claims that arise from:
- Divorce proceedings;
- Bankruptcy;
- Aggressive creditors; and
- Other varieties of litigation;
- Estate planning;
- Privacy and confidentiality, which helps shield business affairs and assets from detection by:
- Potential claimants;
- Ex-spouses;
- Creditors;
- Business competitors; and
- Others; and
- Reduction of tax liability. It is important to consult a tax and business lawyer for these issues.
An IBC can help an individual accomplish a variety of goals, including:
- Opening and holding bank accounts in the name of the IBC;
- Holding and transferring funds globally;
- Engaging or operating in international business and other related transactions globally;
- Receive income; and
- Helping to save money through local jurisdiction exemption from corporate taxes. It is important to note that this does not mean an IBC exempts an individual from U.S. taxes.
There are, however, important issues to be aware of regarding IBCs. In its Abusive Tax Scheme Program, Internal Revenue Service (IRS) lists IBCs as potential structures for tax evasion. United States individuals are required to report all of their financial interests in their offshore accounts. An individual may use an IBC for privacy or asset protection from creditors and competitors, but not from the United States government.
What Should Companies Know About Other Countries with Whom They Do International Business?
A company which is doing business in a foreign country should take note of many business-related issues. The business should be aware of the foreign country’s:
- Economic policy;
- Political structure;
- Culture;
- Languages;
- Environmental standards;
- Labor standards;
- Legal structure; and
- Laws.
As noted above, an international business is responsible for abiding by the laws of their own county as well as the laws of the country in which they do business. The business may also be responsible for abiding by any international laws that apply.
When Does International Law Apply?
International laws govern relationships between different nations. Business is one of the most important types of relations between different nations.
International laws consist of a blend of different treaties, organizations, and agreements among the countries. International laws are created from a combination of:
- Treaties and international agreements;
- International organizations and conferences; and
- International customs.
Treaties and international agreements are essentially contracts between two or more nations. If the highest power of each nation involved agrees to the terms, then the treaty becomes binding.
For example, international treaties created a trade agreement between the United States and numerous other nations, known as NAFTA. Any disputes that arise regarding treaties can be handled by courts, such as the International Court of Justice, if the issue cannot be resolved by the parties themselves.
International organizations and conferences establish uniform international laws by adopting resolutions and other standards for all nations that are participating. The World Trade Organization (WTO) is one international organization that holds conferences in order to decide important issues.
International customs usually consist of universal customs which many nations follow. For example, murder is considered a crime in all nations. There are also universal customs in the business realm.
It is important to note that it was previously mentioned that parties can have their disputes resolved by international courts. Participation in international organizations and treaties is, in general, voluntary. For example, one country might impose tariffs on another country in order to create economic distress and force change on some issue.
How Does International Law Regulate Business?
International laws regulate transactions involving international business. International laws provide rules and remedies which the nations have agreed to follow. Types of regulations may include:
- Tariffs taxes on imports;
- Quotas that limit amount of imports;
- Requiring business deals to be completed in good faith; and
- Compensation for foreign investors if the government of a country confiscates their property.
What do International Business Lawyers Do?
An international business lawyer advises, advocates for, and represents a client’s business interests and issues when they involve two or more countries. An international business lawyer must be a licensed lawyer.
Many international business lawyers have specialized education or knowledge of international business law. These types of lawyers must be knowledgeable regarding the laws of different countries, policies of different countries, and agreements pertaining to business.
One of the main duties of a business law attorney is to save a company money. This can be done through:
- Proper structuring of business operations;
- Facilitation of smooth and efficient transactions;
- Assistance with taxation or regulatory matters; and
- Protecting a company from facing potential liability.
The issues that an international business lawyer may assist their clients with includes:
- International trade law;
- Securities; and
- Banking.
How can an American Lawyer Help Me in an International Business Dispute?
It is essential to have the assistance of a contract attorney with any international business disputes you may have. When legal disputes arise between parties from different countries, there may be difficult and complex issues.
Your attorney can advise you of your rights, what laws apply to your business, and represent you should any issues arise. Having an attorney is an investment in the success of your international business.
